I have always had an obsession with taking unnaturally long showers. Now that my parents aren’t here to cut of my water supply, I often fall asleep while showering or stare at the wall for what seems a couple seconds but is actually a good 20minutes. However, with the ability to time my own showers has come another price, that of shampoo. I just recently made a trip to Econofoods and I decided to try a different shampoo product, L’Oreal’s’ Kérastase. I’ve taken a couple showers thus far with the Kérastase Resistance Reinforcing And Refinishing Shampoo and I have to say I’m pleasantly surprised, my hair feels silky and doesn’t look as grey as usual. The retail price is $32 per bottle plus tax, which in Northfield works out to roughly $35. Presuming this shampoo is good for 9 uses, as it contains 8.5 ounces of liquid, the cost per wash is $3.89. However, since this expense is not tax deductible and I am paying for it from my dining hall paychecks, it would require me to earn probably $40 pre-tax to buy the shampoo, so the real cost would be $4.44 per wash.
As a relatively well-informed customer, I can analyze my choices through my opportunity cost. Previously, I was buying shampoo at $14 a bottle. This bottle, “Head & Shoulders 2 In 1 Dry Scalp Care Shampoo” is also significantly larger, 23.7 ounces to be exact. This would allow me to take 24 showers before having to refill or buy a new item. This means that my personal cost per wash for a bottle of Head and Shoulders is $0.58 or $16 for a bottle after tax and thus, actually $0.67 per use.
So, based on my own personal opportunity cost for these two products, the Kerastase is 663% more expensive than its alternative Head and Shoulders brand, both of which clean my hair in a similar fashion and do not have any main significance, which sets them apart. I must thus ask myself, do I enjoy the Kérastase shampoo 6 times more than the Head and Shoulders shampoo? I personally think they are equally as good so I have to conclude that the price difference does not compensate for the almost non-existent difference in performance of both products.
Next weekend, I should then naturally go back to buying Head and Shoulders, but I know won’t. Despite this economic reasoning to which I have subjected myself and the fact that the Kérastase has eaten up more than 50% of my weekly income, my indifference curve for French products is unbelievably biased. I am emotionally attached and put trust into the L’Oreal shampoo for the only reason that the writing on the bottle is in French as I find security and comfort in buying a French product. I have also somehow convinced myself to believe that the high price grants this shampoo properties, which the other brand does not have. Even though L’Oreal may just be using its marketing skills to trick me into making this exact decision, my indifference curve puts me at the point where the y-axis (with units of quantity of L’Oreal shampoo) intersects my budget constraint. I will thus go to Econo this weekend again, to once again purchase my over-priced shampoo.
Here is an example of monopolistic competition in which advertising and packaging are a significant source of inefficiency. It is crazy that these two very similar products are able to be sold at such different prices. L’Oreal must spend a lot more money on packaging and advertising to gain the favor of consumers which allows them to sell their product so high above market price. Clearly their strategies are working though, if they have convinced you to continuously purchase their product.
This post makes me realize how cheap Head and Shoulder is compared to L’Oreal.. I personally don’t prefer any shampoo product over the other, but I can see your reasoning behind preferring L’Oreal to Head and Shoulder. I think the most accurate economic concept that explains your action is the utility per a dollar spent on a certain product. Since L’Oreal is unbelievably more expensive than Head and Shoulder, if you had same utility return (in other words, satisfaction) from the two products, your utility per a dollar spent on Head and Shoulder would be bigger than that of Head and Shoulder. However, since you have a strongly biased towards L’Oreal, it makes sense that using L’Oreal gives you higher utility (or, satisfaction). It seems as though this satisfaction is big enough to neglect the fact that L’Oreal is about 3 times more expensive than Head and Shoulder.
I can definitely relate to this post. It’s interesting because I have been using Head and Shoulders for so long that I have not even thought of buying another brand purely out of habit. However, recently I used a bit of someone else’s shampoo (Pantene) and saw the difference in my hair’s texture and started thinking about whether I would venture to try other brands of shampoo, or even that version of Pantene. So, before I went to the grocery store recently, I decided that I was going to ‘splurge’ and buy a more expensive/nicer quality shampoo.. But, when I was confronted with the more expensive/nicer quality product, I was not able to get myself to spend the extra $11 to buy it.. Like your rationale, I knew that in the long run, I wouldn’t spend the extra money because I knew I was not going to enjoy the new product two or three times more than my standard Head and Shoulders shampoo.